Amazon launches the Climate Pledge Fund, an ESG fund that invests in green economy companies: yet another confirmation of the growing importance of sustainable finance, in which the giants of the web play a leading role.
Attention to climate change is (finally) becoming “mainstream”, so much so that the world of sustainable finance and ESG investments is growing rapidly. An example is Amazon, which announced the launch of a $ 2 billion venture capital fund to decarbonise the economy and protect the planet. But the e-commerce giant is in good company: the other giants of the web also want to join or create their own projects aimed at the green economy, not to mention investors from all over the world – public and private – who seem to credit the new strategies, focusing more and more on funds and ETF ESG.
ESG investments resist the pandemic
The movement of the business world on issues such as sustainability and environmental protection corresponds to a growing attention by SGRs and investors to SRI funds (Social Responsible Investments), that is, those that incorporate the so-called ESG factors (Environmental, Social and Governance). Attention that has shown a strong growth trend during the health emergency of the covid pandemic.
According to a report published by Morningstar on global flows of sustainable investments, ESG funds have resisted the covid crisis better than traditional funds. Globally, these products recorded inflows of $ 45.6 billion in the first quarter of 2020, against outflows of 384.7 billion in the overall universe of investment funds.
In total, ESG funds could count on $ 841 billion of global assets at the end of March 2020, 12% less than at the end of 2019: the drop was much more contained than the fund industry in general, which experienced an 18% quarter-over-quarter decline.
At the regional level, Europe continues to be the main “green” market with 76% of the global sustainable offer and 81% of the assets, but the interest in socially responsible investments is also growing in other parts of the world
The Amazon fund to decarbonise the economy
Amazon Climate Pledge Fund will invest in companies that are building products, services and technologies to help companies reduce their carbon footprint and operate more sustainably, explained Jeff Bezos. Companies from all over the world, of all sizes and stages, from newly created startups to consolidated companies will be considered. And of different sectors: transport, logistics, circular economy, energy, food, agriculture.
The $ 2 billion Amazon fund, among other things, is part of a wider commitment declared by the company, which aims to eliminate its carbon emissions by 2040 and achieve the objectives by the same date – 10 years in advance – of the Paris Climate Agreement (the same from which the United States withdrew in 2017 by President Trump’s decision).
ESG investments by web giants to drive change
It is nothing new that the giants of the web pose themselves as the leaders of sustainable finance. And surely they will not be watching as public opinion is transformed and directed towards a more sustainable economic and social model. Also because being close to the “civil” world is in their DNA and this is the juice of their success.
Companies – and financial institutions – have the resources to accomplish much more than individuals, and consequently have a responsibility to do it. Above all, technology companies have a huge amount of resources available and have an unprecedented influence in our daily lives. As such, they must be at the forefront and leaders in ESG matters.
However, there are good intentions, but the road to full sustainability is still long.
According to a recent report by KPMG, only 26% of tech companies in the world have significantly incorporated ESG protocols into their strategic planning. Only 34% say that climate change is having a strong impact on investment / financing decisions and 86% believe that the technology sector requires more regulation and standards to be followed to improve its environmental and social sustainability.